James Pethokoukis

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Exactly a month ago, I wrote a piece on a “secret GOP plan” to nudge fiscally troubled states in bankruptcy, giving their governors a chance to rewrite existing public employee union contracts and take other drastic measure to restore solvency. Step 1: Eliminate the Build American Bond subsidy to make it hard for states to borrow. [DONE] Step 2: Force states to reveal the true extent of their pension liabilities. [COMING SOON] Step 3. Rewrite the federal bankruptcy code [COMING SOON]. Two recent events give me further confidence in my call:

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The point is, if Team Obama is moving towards an entrepreneurial incentive model of growth, and away from the false consumption model of big-government spending, it’s very good news. Already we have seen a new free-trade initiative. And there’s even talk of broad-based, personal-income tax-rate flattening that could be part of a big-bang tax-reform package.

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It looks like Robert Gibbs will be leaving the White House to run his own consultancy and work on Obama’s 2012 campaign. Ruy Teixeira, a politics guys not an econ guy, thinks the Obama-Republican tax deal makes it far more likely that campaign will be a successful one:

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If President Barack Obama chooses JPMorgan executive William Daley as his next chief of staff he could at last build bridges with the disgruntled U.S. business community, both on Main Street and Wall Street. Daley’s pro-trade views are a big reason the buzz around his potential nomination is so loud. The pick would also bode well for reaching deals with Republicans on taxes and spending. A few observations (via my column for Reuters Breakingviews):

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The new House Republican majority will use the three weeks before President Obama’s State of the Union address to repeal the healthcare law, cut spending and scrap federal regulations, incoming Majority Leader Eric Cantor (R-Va.) said Tuesday.

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That is the buzz. But it is more than just buzz. My sources tell me that serious conversations are being had, though it is not a done deal. Certainly the business folks I have chatted with would be delighted. Forget about Valerie Jarret. When a top CEO had an issue, he or she would be calling Bill Daley from now on, not Jarrett. Daley would be “their guy.” (And I would also call Gene Sperling the frontrunner to replace Larry Summers.) Here is the Reuters take:

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Wall Street veteran Byron Wien, now vice chairman of Blackstone Advisory Partners, has issued his annual list of ten surprises as well as ten “also rans” for the next 12 months. Here are a few that I have thoughts on: